SOLUTION z MANUAL z FOR
Managerial zAccounting zCreating zValue zin za
zDynamiczBusiness zEnvironment z13e zHilton
Chapter z1-17 zWith zAppendix z(I zII zIII)
zCHAPTER z1
The zCrucial zRole zof zManagerial zAccounting zin za zDynamic zBusiness
zEnvironment
FOCUS zON zETHICS z(Located zbefore zthe zChapter zSummary zin zthe ztext.)
The zfocus-on-ethics zinset zfor zChapter z1 zis zthe zIMA zStatement zof zEthical zProfessional
zPractice. zInstructors zcan zuse zthis zlist zof zethical zprinciples zand zstandards zto zlead za
zclass zdiscussion. zThe zdiscussion zcan zalso zrange zto zconsideration zof zhow zthese
zstandards zmay zhave zbeen zviolated zby zaccountants zand zmanagers zinvolved zin zthe zvarious
zethical zscandals zuncovered zover zthe zpast zseveral zyears. zIt zis zalso zuseful zto zdiscuss zthe
zpros zand zcons zof zthe zprocedures zfor z―Resolving zEthical zIssues‖ zthat zIMA zsuggests
zfor zits zmembers zwhen zthey zbelieve zthey zknow zabout zethical z lapses zin ztheir
z organizations.
We zalso zintroduce zhere zthe zconnection zto zthe z―Ethics zUnwrapped‖ zvideo zseries
zthat zcan zsupplement zthe zdiscussion zof zethics zin zthe zcontext zof zeach zchapter. zIn zeach
zchapter zof zthe ztext, zwe zhave zsuggested ztopic zvideos zin zthe zseries zthat zalign zwith zthat
zchapter. zDiscussion zguidance zand zquestions zrelating zto zthe zvideos zcan zbe zfound zon
zthe z―Ethics zUnwrapped‖ zsite zat z the z URL z provided. z This z resource z is z provided z by
z permission z from z the z University z of z Texaszat zAustin, zMcCombs zSchool zof zBusiness.
ANSWERS zTO zREVIEW zQUESTIONS
1-1 The z explosion z in z e-commerce z will z affect z managers z in z significant z ways. z One z effect
z will z be za zdrastic zreduction zin zpaperwork. zMillions zof ztransactions zbetween
zbusinesses zare zconducted zelectronically zwith zno zhard-copy zdocumentation. zAlong
zwith zthis zmethod zof zcommunicating zfor zbusiness ztransactions zcomes zthe zvery
zsignificant zissue zof zinformation z security. z Businesses z need z to z find z ways z to
z protect z confidential z information zin ztheir zown zcomputers, zin zcloud zcomputing zdata
zcenters, zand zwhile zmoving zacross zthe zinternet, zwhile zat zthe zsame ztime zsharing zthe
zinformation znecessary zto zcomplete ztransactions. zAnother zeffect zof ze-commerce
zis zthe zdramatically zincreased zspeed zwith zwhich zbusiness ztransactions zcan zbe
zconducted. zIn zaddition, zthere zwill zbe zdramatic zchanges z in z the z way z managerial
z accounting
Managerial z procedures z are z carried z out, z one z example
zAccounting, 5-1
z13/e© zMcGraw zHill zLLC. zAll zrights zreserved. zNo zreproduction zor zdistribution zwithout zthe zprior zwritten zconsent zof
zMcGraw zHill zLLC.
, being z cloud-based z budgeting, z which z is z the z enterprise-wide z and z electronic z completion z of
a z company‘s z budgeting z process z using z cloud-based z software z and z data z storage.
1-2 Plausible z goals z for z the z organizations z listed z are z as z follows:
(a) Amazon.com: z(1) zTo zachieve zand zmaintain zprofitability, zand z(2) zto zgrow zon-
line zsales zof ztheir zmany zproducts. zAmazon zis zalso zfamous z(infamous) zfor
zwanting zto zhave zevery zproduct zin zthe zworld zon zits zsite.
(b) American zRed zCross: z(1) zTo zraise zfunds zfrom zthe zgeneral zpublic zsufficient zto
zhave zresources zavailable zto zmeet zany zdisaster zthat zmay zoccur, zand z(2) zto
zprovide zassistance zto zpeople zwho zare zvictims zof za zdisaster zanywhere zin
zthe zworld zon zshort znotice.
(c) General zMotors: z(1) zTo zearn zincome zsufficient zto zprovide za zgood zreturn zon
zthe zinvestment zof zthe zcompany's zstockholders, zand z(2) zto zprovide zthe zhighest-
quality zproduct zpossible.
(d) Wal-Mart: z(1) zTo zpenetrate zthe zretail zmarket zin zvirtually zevery zlocation zin
zthe zUnited zStates, zand z(2) zto zgrow zover ztime zin zterms zof znumber zof zretail
zlocations, ztotal zassets, zand zearnings. zAlso, zto zbe zcompetitive zwith
zAmazon zin zthe ze-retail zspace.
(e) City zof zSeattle: z(1) zTo zmaintain zan zurban zenvironment zas zfree zof zpollution
zas zpossible, zand z(2) zto zprovide zpublic zsafety, zpolice, zand zfire zprotection zto zthe
zcity's zcitizens.
(f) Hertz: z(1) zTo zbe za zrecognizable zhousehold zname zassociated zwith zrental zcar
zservices, zand z(2) zto zprovide zreliable zand zeconomical ztransportation
zservices zto zthe zcompany's zcustomers.
1-3 The z four z basic z management z activities z are z listed z and z defined z as z follows:
(a) Decision z making: z Choosing z among z the z available z alternatives.
(b) Planning: z Developing z a z detailed z financial z and z operational z description
z ofzanticipated zoperations.
(c) Directing z operations: z Running z the z organization z on z a z day-to-day z basis.
(d) Controlling: z Ensuring z that z the z organization z operates z in z the z intended
z manner z andzachieves zits zgoals.
5-2 Solutions zManual
© zMcGraw zHill zLLC. zAll zrights zreserved. zNo zreproduction zor zdistribution zwithout zthe zprior zwritten zconsent zof
zMcGraw zHill zLLC.
,1-4 Examples zof zthe zfour zprimary zmanagement zactivities zin zthe zcontext zof za znational
zfast- zfood zchain zare zas zfollows:
(a) Decision zmaking: zChoosing zamong zseveral zpossible zlocations zfor za znew zfast-
food zoutlet.
(b) Planning: zDeveloping za zcost zbudget zfor zthe zfood zand zpaper zproducts zto zbe
zusedzduring zthe znext zquarter zin za z particular zfast-food zrestaurant.
(c) Directing zoperations: zDeveloping zdetailed zschedules zfor zpersonnel zfor zthe
znextzmonth z to z provide z counter zservice zin za z particular z fast-food z restaurant.
(d) Controlling: zComparing zthe zactual zcost zof zpaper zproducts zused zduring za
zparticular zmonth zin za zrestaurant zwith zthe zanticipated zcost zof zpaper
zproducts zforzthat zsame ztime zperiod.
1-5 Examples z of z the z objectives z of z managerial-accounting z activity z in z an z airline
z companyzare zdescribed zbelow:
(a) Providing zinformation zfor zdecision zmaking zand zplanning, zand zproactively
zparticipating zas zpart zof zthe zmanagement zteam zin zthe zdecision zmaking zand
zplanning zprocesses: zManagerial zaccountants zprovide zestimates zof zthe zcost
zof zadding za zflight zon zthe zroute zfrom zDallas zto zMiami zand zactively
zparticipate zin zmaking zthe zdecision zabout zadding zthe zflight.
(b) Assisting zmanagers zin zdirecting zand zcontrolling zoperations: zManagerial
zaccountants zprovide zinformation zabout zthe zactual zcosts zof zflying zthe
zcompany‘szAsian zroutes zduring za zparticular zmonth.
(c) Motivating zmanagers zand zother zemployees ztoward zthe zorganization's zgoals:
zA zbudget zis zprovided zfor zthe zcost zof zhandling zbaggage zat zChicago zO'Hare
zAirport. zThe zbudget zis z given zto z the z airline's zbaggage zhandling zmanager,
zwho zis zexpected zto zstrive zto zachieve zthe zbudget.
(d) Measuring zthe zperformance zof zactivities, zsubunits, zmanagers, zand zother
zemployees zwithin zthe zorganization: zQuarterly zincome zstatements zare zprepared
zfor zeach zof zthe zairline's zmajor zgeographical zsectors, zand zthese zincome
zreports zare zused zto zevaluate zthe zearnings zperformance zof zeach zsector
zduring zthe zrelevant ztime zperiod.
(e) Assessing zthe zorganization's zcompetitive zposition zand zworking zwith zother
zmanagers zto zensure zthe zorganization's zlong-run zcompetitiveness zin zits zindustry:
zInformation zabout zindustry-wide zperformance zstandards zis zobtained zand
zcompared zwith zthe zairline's zown zperformance. zFor zexample, zhow zdoes zthe
zairline zstack zup zagainst zits zcompetitors zin zticket zprices, zon-time zdepartures,
zmishandled zbaggage, zcustomer zcomplaints, zand zsafety?
Managerial zAccounting, z13/e 5-3
© zMcGraw zHill zLLC. zAll zrights zreserved. zNo zreproduction zor zdistribution zwithout zthe zprior zwritten zconsent zof
zMcGraw zHill zLLC.
, 1-6 Four zimportant zdifferences zbetween z managerial zaccounting z and financial
z
zaccounting zare zlisted zbelow:
(a) Managerial-accounting zinformation zis zprovided zto zmanagers zwithin zthe
zorganization, zwhereas zfinancial-accounting zinformation zis zprovided zto zinterested
zparties zoutside zthe zorganization.
(b) Managerial-accounting zreports zare znot zrequired zand zare zunregulated,
zwhereas zfinancial-accounting zreports zare zrequired zand zmust zconform zto
zgenerally zaccepted zaccounting zprinciples.
(c) The zprimary zsource zof zdata zfor zmanagerial-accounting zinformation zis zthe
zorganization's zbasic zaccounting zsystem, zplus zvarious zother zsources.
zThese zsources zinclude zsuch zdata zas zrates zof zdefective zproducts
zmanufactured, zphysical zquantities zof zmaterial zand zlabor zused zin zproduction,
zoccupancy zrates zin zhotels zand zhospitals, zand zaverage ztakeoff zdelays zin
zairlines. zThe zprimary z source zof zdata zfor zfinancial-accounting zinformation zis
zalmost zexclusively zthe zorganization's zbasic zaccounting z system, z which
zaccumulates z financial z information.
(d) Managerial-accounting zreports zoften zfocus zon zsubunits zwithin zthe
zorganization, zsuch zas zdepartments, zdivisions, zgeographical zregions, zor
zproduct zlines. zThese zreports z are z based z on z a z combination z of z historical
z data, z estimates, z and z projections zof zfuture zevents. zFinancial-accounting
zreports zfocus zon zthe zenterprise zin zits zentirety. zThese zreports zare zbased
zalmost zexclusively zon zhistorical ztransaction zdata.
1-7 The zcost-accounting zsystem zis zone zpart zof zan zorganization's zoverall
zaccounting zsystem, zthe zpurpose zof zwhich zis zto zaccumulate zcost zinformation.
zCost zinformation zaccumulated zby zthe zcost-accounting zsystem zis zused zfor zboth
zmanagerial-accounting zand zfinancial-accounting zpurposes. zManagerial
zaccounting zis zthe zbroad ztask zof zpreparing zinformation zfor zmaking zdecisions
zabout zplanning, zdirecting, zand zcontrolling zan zorganization's zoperations.
1-8 Managers zin zline zpositions zare zdirectly zinvolved zin zthe zprovision zof zservices
zor zthe zproduction zof zgoods zin zan zorganization. zManagers zin zstaff zpositions
zsupport zthe zorganization's zoverall zobjectives, zbut zthey zare zindirectly zinvolved
zin zoperations. zExamples zof zline zpositions zin za zuniversity zare zthe zpresident,
zwho zis zthe zuniversity's zchief zexecutive zofficer, zand zthe zbusiness zschool zdean,
zwho zis zresponsible zfor zrunning zthe z―division‖ zcalled zthe zbusiness zschool.
zExamples zof zstaff zpositions zin za zuniversity zare zthe zuniversity zcounsel, zwho zis
zthe zuniversity's zchief zlawyer, zand zthe zdirector zof zmaintenance, zwho z is zcharged
zwith z maintaining zthe z university's zfacilities.
1-9 An zorganization's zcontroller z(or zcomptroller) zis zthe zchief zmanagerial zand
zfinancial zaccountant. zThe zcontroller zusually zis zresponsible zfor zsupervising zthe
zpersonnel zin zthe zaccounting zdepartment zand zfor zpreparing zthe zinformation
zand zreports zused zin zboth z managerial z and z financial z accounting. z The z treasurer
© zMcGraw zHill zLLC. zAll zrights zreserved. zNo zreproduction zor zdistribution zwithout zthe zprior zwritten zconsent zof
zMcGraw zHill zLLC.
